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University of Alaska v. Tovsen (6/26/92), 835 P 2d 445
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Notice: This is subject to formal correction before
publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors
to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, in order that
corrections may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
UNIVERSITY OF ALASKA, )
) Supreme Court No. S-4205
Appellant, )
) Trial Court No.
v. ) 3AN-89-3461 Civil
)
JUDY TOVSEN, ) O P I N I O N
)
Appellee. ) [No. 3854 - June 26, 1992]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Roy H. Madsen,
Judge.
Appearances: Peter C. Partnow, Katheryn
Bradley, Condon, Partnow & Sharrock,
Anchorage, for Appellant. Sandra K. Saville,
Eric R. Cossman, Law Offices of Sandra K.
Saville, Anchorage, for Appellee.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
MATTHEWS, Justice.
I. INTRODUCTION
In this appeal the University of Alaska challenges the
decision of the superior court nullifying the University's
termination of Judy Tovsen, a probationary employee. The
superior court ordered the University to reinstate Tovsen with
full back pay. We affirm in part, reverse in part, and remand
with instructions.
II. FACTS AND PROCEEDINGS
The University hired Tovsen on September 26, 1988, to
serve as a mail clerk. Under University personnel regulations,
new employees are on probationary status for the first six months
of their employment. Univ. Reg. 04.01.06. Because other
employees had applied for the same position, the selection of
Tovsen generated tension in the mail room. There were complaints
about Tovsen's performance. On October 20, 1988, Sid Reed,
Tovsen's supervisor, informed her that her job performance was
unacceptable. In a letter, he gave her one week to demonstrate
improvement. On October 28, 1988, when he was informed that she
was still behind in her work, Reed terminated Tovsen.
Tovsen filed a written grievance claiming that Reed's
decision was an abuse of discretion. After an evidentiary
hearing, the University Grievance Council found that "[Reed's]
reasons for terminating [Tovsen] were inaccurate." According to
the Council, Tovsen's performance was not "judged objectively"
and she had not been given adequate time or training to learn her
job. The Council found that Reed had been negligent in
supervising, training and evaluating Tovsen.
Despite these findings, the Grievance Council
recommended against reinstating Tovsen to her former position.
The Council believed that University Regulation 04.01.06 gave
Reed the discretion to terminate Tovsen without just cause based
on his subjective dissatisfaction with her performance.
Chancellor Behrend accepted the Council's decision. Following an
administrative appeal, University President O'Dowd affirmed.
Tovsen appealed to the superior court. Judge Madsen
ruled that University Regulation 04.01.06 did not give a
supervisor authority to terminate a probationary employee based
on the supervisor's subjective dissatisfaction. As a result, the
court ordered that Tovsen be reinstated to her probationary
position with back pay from the date of termination until the
date of reinstatement. The University appealed the superior
court's decision.
III. DISCUSSION
This case hinges on the correct interpretation of
University Regulation 04.01.06.1 The University interpreted the
regulation to be analogous to a "satisfaction"contract, which
grants the probationary employee's supervisor the authority to
terminate an employee whenever the supervisor is personally and
in good faith unsatisfied with the employee's performance.
The existence of "satisfaction"contracts is well
established.
Most courts agree that a contract
by which one agrees to employ another as long
as the employer is satisfied with the
services rendered gives the employer the
right to terminate the contract and discharge
the employee whenever . . . the employer,
acting in good faith, is actually
dissatisfied with the employee's work . . . .
53 Am. Jur. 2d, Master and Servant, 37, p. 113 (1970).
As for identifying when such a contract exists, one
authority has noted that
[t]his type of contract almost always
arises when there is an express
representation, either in a communication
from the employer or in a document assented
to by it, that the employee is to serve "as
long as his services are satisfactory to the
employer,"or words to that effect; that is
it is usually clear whether the parties have
entered into such a contract.
John C. McCarthy, Recovery of Damages for Wrongful Discharge 2d,
3.53 at 286 (1990).
In Johnson v. Jefferson County Board of Health, 662
P.2d 463, 471 (Colo. 1983), the Colorado Supreme Court,
interpreting a personnel rule that a county public health officer
"shall be appointed . . . to serve at the pleasure of the board,"
noted that "an employee who serves `at the pleasure' of his
employer generally may be discharged at any time without cause or
formal procedure."
Tovsen, on the other hand, argues that the University's
regulation requires objective "just cause"for the termination of
a probationary employee. She bases this argument on two grounds:
1) that the regulation is unlike typical satisfaction clauses;
and 2) that the language of the regulation requires an objective
failure to meet acceptable standards. We agree with Tovsen on
both counts.
University Regulation 04.01.06(B) states that "[i]f the
employee's performance is found to be unsatisfactory, the
employee will be terminated." The determination of satisfaction
is not explicitly tied to the personal judgment of the employer
as it is in most satisfaction contracts. McCarthy, supra, at
286. Given the first part of University Regulation 04.01.06,
which states that "[t]he performance of these employees shall be
evaluated prior to the end of the probationary period," the
regulation more clearly resembles an agreement permitting
termination only when objective standards of performance are not
satisfied.2 In addition, the regulation itself directs that
"[t]he performance of [probationary] employees . . . be
evaluated"; a probationary employee may be terminated if his or
her "performance is found to be unsatisfactory." Use of the
words "found"and "evaluated"also suggests a process involving
objective standards rather than mere personal beliefs.
Our conclusion that University Regulation 04.01.06
requires an objective just cause termination is supported by our
decision in Eales v. Tanana Valley Medical-Surgical Group, Inc.,
663 P.2d 958 (Alaska 1983). In Eales we indicated that an
employer's representation to Eales "that so long as he was
properly performing his duties he would not be discharged" meant
that he could not be terminated without just cause. Id. at 959;
see also Danzer v. Professional Insurors, Inc., 679 P.2d 1276,
1280 (N.M. 1984) (a contract indicating that an employee must
"perform his duties `to the reasonable satisfaction of his
employer'" required "termination for good cause"); Stauter v.
Walnut Grove Products, 188 N.W.2d 305, 309 (Iowa 1971) (an oral
agreement which provided that the plaintiff was to be employed as
long as he was able to competently perform the services was not a
contract under which the employee serves only to the satisfaction
of the employer).
In the present case the Grievance Council found that
Tovsen's termination was not supported by just cause. Therefore
its recommendation that Tovsen not be reinstated was wrong as a
matter of law.
Under the University's grievance procedures, the
Council's decision was merely a recommendation to the Chancellor.3
However, Chancellor Behrend's written decision adopted the legal
conclusions of the Grievance Council. President O'Dowd's
decision on the administrative appeal did so as well. Since
University Regulation 04.01.06, correctly interpreted, requires
just cause for termination of probationary employees, these
decisions must be reversed.
Judge Madsen ordered reinstatement with back pay from
the date of termination until the date of reinstatement. This
remedy, however, is inappropriate at this stage because the
Chancellor has the power to reject the recommended findings of
the Grievance Council that Tovsen's dismissal was not supported
by good cause. Thus this case should be remanded to the
Chancellor with directions to him to exercise his fact finding
responsibilities in accordance with part (H) of the grievance
regulation. The Chancellor's factual findings must be in
writing, Regulation 04.04.01(H), and they must be supported by
the evidence.4
IV. CONCLUSION
We affirm the decision of the superior court, reversing
the decision of the University President which upheld the termina
tion of Tovsen. We vacate the decision of the superior court
insofar as it ordered Tovsen to be reinstated and awarded her
back pay. Instead, the superior court on remand should remand
the case to the Chancellor so that he may exercise his
independent fact finding responsibilities under University
grievance procedures.
AFFIRMED in part, REVERSED in part, and REMANDED with
instructions.5
_______________________________
1 University Regulation 04.01.06 reads as follows:
Probationary Status at Time of Hire
All non-exempt and exempt (non-faculty)
employees shall be in probationary status for the
first six months of employment. The performance
of these employees shall be evaluated prior to the
end of the probationary period.
A. If the employee's performance is
found to be satisfactory, probationary status
shall cease.
B. If the employee's performance is
found to be unsatisfactory, the employee will
be terminated.
C. If the employee's performance is
found to be minimally acceptable, the
probationary status may, at the discretion of
the supervisor, be extended.
2 We use the term "objective standards"to mean standards
that exist by reference to external sources such as employee
rules and regulations or standards that a reasonable person would
use in evaluating an employee's performance.
3 Regulation 04.04.01(F),(G),(H) & (I) provides:
F. Conduct of Hearings
At the hearing at the Chancellor level,
each party shall have these rights: To call
and examine witnesses; to introduce exhibits;
to cross-examine opposing witnesses on any
matter relevant to the issues, even though
that matter was not covered in the direct
examinations; to request that the hearing be
open to the public, to impeach any witness
regardless of which party called him/her to
testify; and to rebut the evidence against
him/her. If a party does not testify in
his/her own behalf, he/she may be called and
examined as if under cross-examination. The
parties may be advised by legal counsel, but
legal counsel may not make formal appearance,
nor speak or ask questions in a party's
behalf. If the grievant is unable to
effectively present his/her own case, for
reasons acceptable in the discretion of the
Grievance Council, the grievant may choose to
have his/her case presented by another group,
who shall not be a lawyer.
Hearings need not be conducted according
to technical rules relating to evidence and
witnesses. Any relevant evidence shall be
admitted if it is the sort of evidence on
which responsible persons are accustomed to
rely in the conduct of serious affairs,
regardless of the existence of any common law
of statutory rule which might make improper
the admission of such evidence over objection
in civil or criminal actions. The rules of
privilege shall be effective to the same
extent that they are now or hereafter may be
recognized in civil actions, and irrelevant
and unduly repetitious evidence or scandalous
evidence shall be excluded. The local
Grievance Council shall rule on all matters
of evidence and procedure in their discretion
giving special weight to the need for speedy
resolution of the grievance, the desirability
of keeping the proceedings as simple and
informal as possible, and the interests of
justice and fairness. Continuances or
further hearings are not favored. Parties
with rights affected by the same issues may
be joined in the same hearing if possible;
all related grievances by one person shall be
heard in the same hearing, if possible. A
grievance may be settled at any time.
G. Council Recommendations
The Council will submit a report of its
deliberations and recommendations to the
Chancellor within five (5) working days of
the conclusion of the hearings. . . . The
report will include:
1. A copy of the grievant's
written complaint, and a supplemental
statement of issue by the Council, if
necessary.
2. A summary of facts determined
by the Council through its investigation
and hearing.
3. The recommendation as to
whether the Chancellor should find that
there was a violation, misinterpretation
or misapplication of university policies
and regulations, or an abuse of
discretion.
4. Recommendation, if any,
concerning possible action to be
taken.
H. Chancellor's Decision
The Chancellor will inform the grievant
and other parties at interest of the
Council's findings, and the Chancellor shall
render a written decision within ten (10)
working days; copies of the Chancellor's
decision shall be given to the grievant, and
the other parties at interest, and to the
University Counsel. The decision of the
Chancellor shall be final unless appealed to
the President by any party.
I. Appeals
Appeals to the President must be taken
within fifteen (15) working days after the
written decision of the Chancellor is given.
A decision not appealed within the time
limits provided shall be considered accepted
by the parties as a satisfactory settlement
of the matter. The appeal to the President
shall be upon the record as made before the
Council. Hearings conducted by the President
or designee shall be conducted as provided
for hearings before the local Grievance
Council.
The decision of the President shall be
final.
4 If the Chancellor agrees with the recommended findings of
the Grievance Council, Tovsen should be reinstated to her former
position with five months remaining to be served in probationary
status. In addition, she should be entitled to back pay from the
date of termination until the date of reinstatement. In such
circumstance, the usual rules for determining back pay will
apply:
[A] wrongfully discharged employee is
entitled to the total amount of the agreed
upon salary for the unexpired term of his
employment, less what he could earn by making
diligent efforts to obtain similar
employment. 5 A. Corbin, Contracts 1095
(1964).
Skagway City School Board v. Davis, 543 P.2d 218, 225 (Alaska
1975). Further, amounts actually earned from any type of
substitute employment incompatible with Tovsen's prior employment
must be deducted. Redman v. Dept. of Education, 519 P.2d 760,
771 (Alaska 1974).
5 The University has raised a number of other points on
appeal. We have reviewed them and find that they clearly lack
merit.
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